What are the obligations of each indemnified party regarding insurance claims related to the Bhc franchise agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) For the indemnification to be effective, each indemnified party ("Indemnified Party") will give the indemnifying party ("Indemnifying Party") reasonable notice of each claim or loss for which the Indemnified Party demands indemnity and defense, except that failure to provide such notice will not release the Indemnifying Party from any obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure.
The Indemnifying Party will assume, at its sole cost and expense, the defense of such Proceeding through legal counsel reasonably acceptable to the Indemnified Party, except that the Indemnified Party may at its option and expense select and be represented by separate counsel.
The Indemnifying Party will have control over the Proceeding, including the right to settle; provided, however, the Indemnifying Party will not, absent the written consent of the Indemnified Party, consent to the entry of any judgment or enter into any settlement that: (i) provides for any admission of liability on the part of the Indemnified Party or relief other than the payment of monetary damages for which the Indemnifying Party will be solely liable; or (ii) adversely affects the rights of the Indemnified Party under this Agreement, or (iii) does not release the Indemnified
Party from all Proceedings and "Losses" (as defined in section 16.2(d) below) in respect thereof. In no
event will the Indemnified Party be liable for any Losses that are compromised or settled in violation of this section 16.2.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the indemnified party has specific obligations to ensure the indemnification is effective. The Indemnified Party must provide reasonable notice to the Indemnifying Party of any claim or loss for which they are seeking indemnity and defense. However, failure to provide such notice will not release the Indemnifying Party from their obligations, except to the extent that the Indemnifying Party is materially prejudiced by the failure to receive timely notice. This means that while prompt notification is expected, a delay will only void the indemnity if it significantly harms the Indemnifying Party's ability to defend the claim.
Bhc's FDD specifies that the Indemnifying Party will assume the defense of any legal proceeding at its sole cost and expense, using legal counsel reasonably acceptable to the Indemnified Party. However, the Indemnified Party retains the option to select and be represented by separate counsel at their own expense. This allows the Indemnified Party to have their own representation if they choose, but they must bear the cost unless otherwise agreed.
The Indemnifying Party has control over the legal proceeding, including the right to settle. However, this control is limited by the requirement that the Indemnifying Party must obtain written consent from the Indemnified Party before entering into any judgment or settlement that involves (i) any admission of liability on the part of the Indemnified Party or relief other than monetary damages for which the Indemnifying Party will be solely liable; (ii) any adverse effects on the rights of the Indemnified Party under the Franchise Agreement; or (iii) failure to release the Indemnified Party from all proceedings and losses. The Indemnified Party will not be liable for any losses that are compromised or settled in violation of these conditions. This ensures that the Indemnified Party's interests are protected during settlement negotiations.